IEEJ：October 2021 © IEEJ2021

World Energy Outlook 2021
27 October 2021
Laura Cozzi, IEA Chief Energy Modeler
Tim Gould, IEA Chief Energy Economist

IEEJ：October 2021 © IEEJ2021

Context• In the run-up to a crucial COP26 meeting in Glasgow:- Economic recovery is putting gas, coal & power markets under strain, with sharp spikes in prices- Weather-related factors are having large implications for the energy sector- A new global energy economy is emerging, with wind, solar & EVs all setting new records- The shadow of the pandemic still looms large, and has set back progress on energy access• Climate ambitions have never been higher, but the energy & emissions data does not match the rhetoric• This special edition of the WEO explores the transformation of the energy sector in detail, examining:- Where the world is heading, and how this changes if countries meet all their announced pledges- How the world can keep the door to 1.5 °C open, following the IEA’s landmark net zero by 2050 roadmap- The opportunities and benefits that lie along the way, as well as the implications for energy security

IEA 2021. All rights reserved.

Page 2IEEJ：October 2021 © IEEJ2021

The world is starting to bend the emissions curve
Global emissions
Gt CO2-eq

Pre-Parisbaseline

60
50
Since Paris 201540

Stated Policies
Glasgow pledges

30

Announced
Pledges

20
102000

2010

2020

2030

2040

2050

New policies, technology cost reductions, and the pandemic have pulled the projected emissions curve down.
Updated NDCs & long-term net zero pledges decouple emissions and economic growth this decade.
IEA 2021. All rights reserved.

Page 3IEEJ：October 2021 © IEEJ2021

And announced pledges re-shape global energy markets

Oil demand(mb/d)Natural gas demand(bcm)120

Solar PV and wind generation(Thousand TWh)5 000

104 500

8100

4 000

690

3 500

43 0002110
Stated Policies Scenario

80

Announced Pledges Scenario

70
2010

2020

2030

2 5002010

2020

2030

2010

2020

2030

Full realisation of all announced pledges sees peak oil and natural gas demand occurring in the current decade,while annual solar PV and wind capacity additions reach 470 GW in 2030
IEA 2021. All rights reserved.

Page 4IEEJ：October 2021 © IEEJ2021

New coal power is on its way out
Coal-fired capacity additions in the Announced Pledges Scenario
GW

800
PlannedUnder construction

600

Historical400
End of China support
for projects abroad
200

19912000

20012010

20112020

20212030

20312040

20412050

Afterof unabatedpower
plantsdeclinesannounced
pledges,
Afterdecades
decadesof
ofgrowth,
growth,construction
the use of unabatedcoal coal
power
plantsis setsharply
to decline
underunderannounced
policiesand cancellations could cut 20 Gt of emissions to 2050, comparable to savings from the EU reaching net zero by 2050
IEA 2021. All rights reserved.

Page 5IEEJ：October 2021 © IEEJ2021

A large ambition gap remains in 2030
Global emissions
Gt CO2-eq

Pre-Parisbaseline

60
50
Since Paris 201540

Stated Policies
Glasgow pledges

30
20

Remaining gap

Announced
Pledges

102000

2010

2020

2030

2040

Net Zero by 2050
2050

Despite some positive signs, today’s pledges close less than 20% of the gap to the Net Zero by 2050 scenario:
countries with net zero pledges and countries without each account for about half the remaining ambition gap
IEA 2021. All rights reserved.

Page 6IEEJ：October 2021 © IEEJ2021

But we have cost-effective ways to close the gap
Ambition gap in 2030

Cost-effective reductions
6.1 Gt CO2-eq
Other

Gt CO2-eq

15EVs
Cost-effective
technology measures

105

Energyefficiency

Windand solar

Methaneabatement
Other
power

Technologies and policies are available to close the emissions gap to 2030. More than 40% of the actions required are
cost-effective – bringing more low-cost renewables into power, reducing methane leaks, and improving efficiencyIEA 2021. All rights reserved.

Page 7

IEEJ：October 2021 © IEEJ2021

The rise of new energy-related commodities
Value of international energy-related resource trade2019

2050: Announced Pledges Scenario

2050: Net Zero Scenario

USD 1.5 Trillion

USD 1.5 Trillion

USD 0.9 Trillion

Naturalgas(14%)
Oil
(66%)

Coal(9%)Criticalminerals(11%)

Criticalminerals(18%)
Oil(58%)

Hydrogen (7%)

Criticalminerals(47%)

Hydrogen(35%)

Oil(11%)Naturalgas (5%)
Coal(2%)Natural gas Coal(5%)(12%)

Under announced pledges, a growing share of oil and gas trade flows towards developing economies in Asia.
In all scenarios, but especially in the net zero pathway, critical minerals and hydrogen-based fuels are on the rise
IEA 2021. All rights reserved.

Page 8IEEJ：October 2021 © IEEJ2021

Looming risk of more turbulence ahead for energy markets

USD billion (2020)

Oil and natural gas production investment

Clean energy and infrastructure investment

2 000

4 000

1 500

3 000

1 000

2 000

500

1 000

2018

2019

2020

2021e

Net Zero
Scenario2022-30

2018

2019

2020

2021e

Net Zero
Scenario2022-30

The world is not investing enough to meet its future energy needs; oil and gas investment is geared to a world ofstagnant or falling demand, while transition-related spending is not rising nearly fast enough
IEA 2021. All rights reserved.

Page 9IEEJ：October 2021 © IEEJ2021

Well-managed transitions offer shelter from price volatility

USD (2020)

Average household energy bills
2 000
Impact of a price shock(oil, natural gas and coal)
1 500

1 000500

2016-20

Stated Policies
Scenario

2030

Net ZeroScenario

Clean energy transitions can cushion consumers from the shock of price spikes for oil and gas, if households canget help to manage the upfront costs of energy efficiency improvements & electrification
IEA 2021. All rights reserved.

Page 10IEEJ：October 2021 © IEEJ2021

A new global energy economy is emerging

USD billion (2020)

Estimated market sizes of oil and selected clean energy technology equipment in the Net Zero Scenario
1 500
Fuel cells
1 200Electrolysers

900

Battery packs
Wind turbines

600

Solar PV modules
300

Oil

Cleantech
2020

OilCleantech
2030

Oil

Cleantech
2040

Oil

Cleantech
2050

Explosive growth in clean energy deployment over the next decades could create a market opportunity for
manufacturers of key equipment worth a cumulative USD 27 trillion through to 2050
IEA 2021. All rights reserved.

Page 11IEEJ：October 2021 © IEEJ2021

Conclusions• The transition to a sustainable energy system is the solution to the turbulence that we are seeing in gas,coal and electricity markets today – not the cause• A laser-like focus on clean electrification, energy efficiency, methane abatement & innovation can close thenear-term gap with a 1.5°C future; cost-effective solutions are available & every country needs to step up• The longer today’s mismatch in energy investment persists, the greater the risks to energy security & pricevolatility. A massive policy-driven surge in clean energy transitions is the way forward• A new global energy economy is emerging, one that will be more electrified, efficient, digitalised & clean –offering enormous potential for growth and employment• Governments have unrivalled capacity to transform the energy sector: a wave of investment in a net zero
future must be driven by an unmistakeable signal from Glasgow

IEA 2021. All rights reserved.

Page 12IEEJ：October 2021 © IEEJ2021

IEA 2021. All rights reserved.

Page 13

Contact: report@tky.ieej.or.jp